BUSINESS + ECONOMY
Inflation surprisingly rose in January, according to the Fed’s preferred gauge
(CNN) — The Federal Reserve’s preferred inflation gauge heated up unexpectedly in January, showing the continued strength of the US economy — and that rising prices won’t be so easily defeated.
Inflation picked up speed in January as the Personal Consumption Expenditures price index rose 5.4% in January from a year earlier, the Commerce Department’s Bureau of Economic Analysis reported Friday. In December, prices rose 5.3% annually.
In January alone, prices were up 0.6% from the prior month, a higher monthly gain from December’s increase of 0.2%.
Some welcome news: Goods prices continued falling, declining 0.7% from the previous month. But services prices increased 0.5%.
The Fed’s go-to inflation gauge, the Core PCE Index (which strips out the often volatile food and energy categories) showed prices rising 0.6% on a monthly basis and 4.7% for the 12 months ending in January.
Economists were expecting the annual core index to land at 4.3% and extend what was a three-month stretch of cooling.
The PCE indexes are included in the Personal Income and Outlays report published by the BEA. The report includes the latest estimates on how much consumers are bringing in and how much they’re spending.
Consumer spending and personal incomes rose 1.8% and 0.6% last month, respectively, according to the report. Spending outpaced economists’ expectations of a 1.3% gain and income growth fell below projections of 1%.
This story is developing and will be updated.
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